News

Italy is set to become a testing ground for the regulation of high-frequency trading as politicians wrestle with the contentious topic.

Over Christmas, Italy introduced a financial transactions tax that went further than a French equivalent last August. Specific legislation was aimed at high-frequency trading in local equities and derivatives – asset classes that have attracted high-frequency traders because they are liquid and traded on exchanges.

U.S. regulators are about to take a big step toward reining in high-frequency trading: defining what it is. On Wednesday, a Commodity Futures Trading Commission subcommittee is expected to propose a roughly 60-word definition of high-frequency trading that would define it broadly, a bad sign for traders who had hoped for narrower language.

Exchanges and brokers must take the lead in policing high-frequency trading (HFT), according to the pan-European markets regulator, which has given market participants slightly more than four months to comply with guidelines on computerised trading.

European regulators have backed off a proposal that automated traders must stay in the markets quoting prices at all times in a sign that Europe might soften aspects of its clampdown on “high-frequency” trading. The European Commission last month published proposals for a sweeping overhaul of the equities, bonds and derivatives markets in Europe, enshrined in a new version of the Markets in Financial Instruments Directive (Mifid), first enacted in 2007.